Assembly Passes Bill in Response to Wells Fargo Scandal
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FOR IMMEDIATE RELEASE CONTACT: Ella Strain (Assemblymember Dababneh) September 5, 2017 (916) 319-2045 Ezrah Chaaban (Senator Dodd) (916) 651-4003 Assembly Passes Bill in Response to Wells Fargo Scandal SACRAMENTO – The state Assembly passed a bill by Senator Bill Dodd (D-Napa) and Assemblymember Matt Dababneh (D- Woodland Hills) on Tuesday to protect victims of mass fraud and identity theft. The bill was introduced in response to the Wells Fargo scandal where millions of accounts were fraudulently opened without consent, using consumer’s personal information from existing accounts. This legislation would eliminate the use of forced arbitration clauses in contracts that were fraudulently created by financial institutions, giving victims their day in court. “Allowing victims their day in court allows them to recover and helps prevent more victims by putting an end to illegal business practices,” said Senator Dodd. “The idea that consumers can be blocked from our public courts when their bank commits fraud and identity theft against them is simply un-American. I’ve been the victim of fraud and identity theft myself, so I know how jarring and difficult it can be, but being victimized by your once-trusted financial institution has to be even more disturbing. If our bill were already law, Wells Fargo would have been held publicly accountable years ago, and the fraud could have been prevented from spreading.” “With the most recent news uncovering additional fraudulent accounts opened at Wells Fargo Bank without the knowledge and consent of its customers – bringing the total since 2009 to over 3.5 million accounts – it is now even more important that we bring openness and accountability to this process and allow these customers an ability to find justice in our legal system,” said Assemblymember Dababneh. When signing up for financial products, consumers should not be forced into arbitration clauses when the financial institution itself is the one committing these deceptive acts. This bill will put in place a process to help prevent this kind of fraud and abuse from occurring in the future.” Late last year, it was discovered that Wells Fargo Bank employees had fraudulently used their customers’ personal information to create over two million fake accounts without consent over the course of five years. Some of these fraudulent accounts incurred fees that were then passed along to the victims. Many of the victims attempted to sue the Bank for damages and to recover their losses. Last week, Wells Fargo admitted the actual number of victims may eclipse 3.5 million, nearly 70 percent more victims than previously reported. “Instead of allowing victims to have their day in court, where an independent judge or jury can arrive at a verdict following an open and fair trial, Wells Fargo wrongly pushed customers seeking justice into forced arbitration,” said California State Treasurer John Chiang, explaining the need for the legislation. “While the bank’s latest marketing slogan is ‘On the side of customers,’ it has stubbornly persisted in denying its victims the right to be made whole by coercing them into a secretive process that tilts in favor of corporations. The absence of transparency is almost always a breeding ground for abuse and corruption. Senate Bill 33, authored by Senator Bill Dodd, will level the legal playing field and restore an urgently needed measure of fairness. I applaud his efforts and am proud of our partnership.” Wells Fargo argued, with the backing of the courts, that their customers waived their right to sue when they opened their “legitimate” accounts with the Bank. The only recourse left to victims was through binding arbitration. Arbitration cases usually tend to favor the defendant as they are able to select the arbitrator overseeing the case. In the aftermath of the scandal, California State Treasurer John Chiang suspended ties between Wells Fargo and the state of California, and the Bank has had to pay fines of $185 million in regulatory fines for their illegal uses of consumer information. The bill, SB 33, will prohibit the use of forced arbitration in cases where a financial institution has wrongfully used consumer information to commit fraud. The measure is sponsored by Treasurer John Chiang and leading consumer advocacy groups. The bill now returns to the Senate, where it previously passed, for a concurrence vote and will then head to the Governor’s desk. Similar legislation has been introduced in the United States Congress by U.S. Senator Sherrod Brown (D-Ohio) and Representative Brad Sherman (D-Calif.), but that legislation has yet to be granted a hearing in the Republican controlled Congress. ### Matt Dababneh represents the 45th Assembly District that includes the communities of Bell Canyon, Calabasas, Canoga Park, Chatsworth, Encino, Hidden Hills, Northridge, Reseda, Sherman Oaks, Tarzana, West Hills, Winnetka, and Woodland Hills. For more information please visit the Assemblymember’s website, www.assembly.ca.gov/a45 Senator Bill Dodd represents the 3rd Senate District, which includes all or portions of Napa, Sonoma, Solano, Yolo, Sacramento, and Contra Costa Counties. You can learn more about Senator Dodd at www.sen.ca.gov/dodd. .